Vijay Mallya has case of fraud to answer, UK court told

06/12/2017

London: The extradition trial of Vijay Mallya, wanted in India on charges of Rs 9,000 crores fraud and money laundering, began at a UK court here, with the prosecution asserting that the embattled liquor baron had a "case of fraud" to answer.
The trial, however, was briefly halted as the courtroom had to be evacuated due to a fire alarm. The 61-year-old tycoon and others waited outside the Westminster magistrates court during the fire drill.
The trial began with the Crown Prosecution Service (CPS), arguing on behalf of the Indian government, presenting its opening arguments in the case which focused on loans totalling around Rs 2,000 crores sought by the erstwhile Kingfisher Airlines from a consortium of Indian banks.
It concluded the opening day's proceedings by asserting that they had "shown by virtue of evidence a prima facie case" against Mallya and the hearing should now move to the next phase of whether there were any "bars to extradition".
The CPS detailed "three chapters of dishonesty" by the former Kingfisher Airlines boss the first being misrepresentations to various banks to acquire the loans, then how he misused the money and finally his conduct after the banks recalled the loans.
"Instead of acting as an honest person and doing what he could to meet his obligations, he sets about erecting lines of defence," said CPS barrister Mark Summers.
The Indian government says the reasons why a court can conclude, that these were loans that the "defendant (Mallya) never intended to repay" and that the company and airline industry were in "intensive care" and heading only in one direction, Summers said.
Instead of absorbing those losses, which would "impinge on his lifestyle", Mallya chose to palm it off to banks, in particular state-owned banks. Several internal emails, the government claims, disclose the reality of the position which was misrepresented to the banks, he said. The judge noted that businessmen in this position would be "hopeful that things will turn around", but the CPS said this was not the case with Kingfisher Airlines.
It went on to add that loans acquired in the name of rescuing the struggling airline were in fact used to pay off other debts, including paying the rent on a corporate jet "owned by Kingfisher but operated for the defendant's (Mallya) own benefit".
The CPS presented an email written by Mallya in December 2009 justifying the use of loans to "achieve round robins", confirming that he was open to using money received from banks for Kingfisher Airlines to repay other banks to settle overdue bills and charges.
This was "expressly prohibited" as part of the agreed terms of the loans provided to the then struggling airline.
He also failed in his obligations as a "personal guarantor" of the loans by failing to use 40 million dollars received from Diageo from the sale of sales in United Spirits Limited to repay some of the debt.
"Instead of honouring his obligations, he squirrelled away the 40 million dollars in trusts for his children," Summers said.
Mallya claimed later that those personal guarantees were secured by the banks under duress, a move the CPS highlighted was not the actions of an honest person.
The judge responded with a chuckle by saying it was "quite inventive though".
The CPS admitted that there may have been "irregularities" in the internal processes of the banks sanctioning some of those loans but that would be a question to be dealt with at a later stage in India.
"The focus of our case will be on his (Mallya's) conduct and how he misled the bank and misused the proceeds," said CPS barrister Mark Summers. He then went on to lay out a detailed chronology of events, with specific focus on a loan sought by Kingfisher Airlines from IDBI bank in November 2009.

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